Life Hedge How to prevent your life from being a roller coaster

Life Hedge: How to prevent your life from being a roller-coaster (Part 2)

by with No Comment General EconomyInsuranceMoney ManagementMoney Mindset

In the previous post on Life Hedge: how to prevent your life from being a roller-coaster, we talked about investing hedge and how you can use various tools to hedge on your investing portfolio specially during times of the recent coronavirus. In this article, we will talk about something more personal and how to prevent our lives from being a roller-coaster.

Life Hedge How to prevent your life from being a roller coaster
Life Hedge: How to prevent your life from being a roller coaster

Look around you, there are many things in life that we can be grateful for. Just by having a roof over your head, you are richer than 75% of the world. (Source: Elephantjournal). If you are reading this article, it probably means you have assess to the internet, a phone, a laptop, an electricity source and money. Despite that, most of us might feel that life is not enough and demand more of it.

The question that we can ask ourselves is this. Why are we demanding for more even though we know we have enough? This reminds me of a story of The Golden Egg which I will replicate below.

 

Story of The Golden Egg

Once upon a time, there lived a cloth merchant in a village with his wife and two children. They were indeed quite well-off. They had a beautiful hen which laid an egg every day. It was not an ordinary egg, rather, a golden egg. But the man was not satisfied with what he used to get daily. He was a get rich-trice kind of a person.

The man wanted to get all the golden eggs from his hen at one single go. So, one day he thought hard and at last clicked upon a plan. He decided to kill the hen and get all the eggs together.

So, the next day when the hen laid a golden egg, the man caught hold of it, took a sharp knife, chopped off its neck and cut its body open. There was nothing but blood all around & no trace of any egg at all. He was highly grieved because now he would not get even one single egg.

His life was going on smoothly with one egg a day but now, he himself made his life miserable. The outcome of his greed was that he started becoming poorer & poorer day by day and ultimately became a pauper. How jinxed and how much foolish he was.

Life Hedge Golden Egg
Life Hedge: Why do we want more Golden Eggs

 

Why do we kill the Golden Goose?

Logically, it don’t make sense to kill something that is good wealth source to us. However, emotionally we want it FASTER and in our journey of doing so, we kill the golden goose.

This primary emotion that we associated commonly is called Greed. However, I believe there could be deeper reasons. I believe that is the reason why many people fall into simple scams, empty promises or bad health (See more: Regrets).

For some, they feel their life is about acquisition and no longer as a means of satisfying their material need. They want to have more than their peers to feel a sense of superiority. For some, they want to have more because they do not have enough when they were young and they fear it will happen to them again. For some, they feel that by buying things they can fills an emotional void in their hearts such as a lack of affection at home. The list could go on and on but it is rooted to the same cause: an emotional void. By understanding, what cause our emotional void can then we protect ourselves from ourselves (read that again :p).

 

Protecting our Golden Goose

Life Hedge Protecting the Golden Goose
Life Hedge: Protecting the Golden Goose

To prevent your life from being a roller-coaster, there are some hedges that we MUST put in place so that life will not change so drastically. In a certain sense, we are the golden goose and the ultimate treasure/asset that we have to protect. We hope that by sharing the two life hedges, you can live a life of abundance and laughter.

 

  • Discover the emotional void

I can say with confidence that many people live their lives without truly understanding about themselves. When we are young, some of us are force to go through education and we are constantly chasing for academical success. It seems like the success in life was to have good academical results. Then we come into the workforce and we are constantly chasing for material success. It seems that the success in life now is linked to our net worth. We constantly seek what the society wants from us and because of that, we might develop some sort of emotional void.

Spending some time with ourselves and asking ourselves deeper question is the start for us to discover the emotional void that we might have. For some, it is certainty. For others, it might be love and connection. I have listed 6 potential voids which people are looking for in their life.

The 6 voids are. “Lack of certainty”, “Lack of variety”, “Lack of love and connection”, “Lack of significance”, “Lack of growth” and the “Lack of contribution”. If this seems familiar, Tony Robbins, an American Author coined the above the 6 human needs. (Read more: 6 Human Needs) . Can you relate to them?

 

  • Maintain the Golden Goose

To have good quality eggs, I can only assume the body of the golden goose have to be strong. Just like ourselves, we need to work and maintain our body by exercising and also eating well. Take reference to the first Singapore’s Prime Minister, even well into his 80s, Mr Lee stuck to a strict exercise routine – 12 minutes walking on the treadmill every morning, 15 minutes after lunch, and another 15 minutes after dinner.

“Without that, I would not be in my present condition physically,” he had said.

Source: Straits Times: Staying fit anywhere, in any way

 

  • Income Hedge/Insurance

Even if we do the above, an illness might still strike us. In an event of major critical illness, we might need to use our life savings to spend on our treatments or new lifestyle. Some treatments could be life-long and we might be forced to sell away our homes to fund those new treatments.

At the same time, we might not be able to work at the same capability after an illness. This would mean that our income might not be as high as before and this will result in a lower standard of living in future.

Is your income hedged after you stopped working?

 

Wishing you the best in this period of time. We hope that everyone can remain calm and healthy during this season. It is a season of crisis but it is also a season of opportunity. Invest with what you have and don’t borrow money to invest in this period of time. If you are new to investing and need help, do talk to me using the contact form or any methods listed below.

God Bless.

If you read until here, thank you again for your patience and your support over in 2019. I hope that in 2020, Wealthdojo can continue to value add you. Let us know what you think in the comments below. This is a working article. The above doesn’t represent my stock recommendation in anyway. Please read our disclaimer for more information.

I hope to nurture genuine relationships with all of my readers. Please feel free to contact me on my Instagram (@chengkokoh) or Facebook Page or my Telegram Channel! Or subscribe to our newsletter now!

 



 

How Not to get your insurance claim rejected disclosure

How not to get your insurance claim rejected

by with No Comment InsuranceMoney Mindset
How not to get your insurance claim rejected. It is very common for people to buy insurance in Singapore especially in the recent years. This is because the level of financial literary has risen over the years in Singapore (Wealthdojo wants to be part of this movement). As more insurance are being bought, there are definitely more claims to be made (a simple law of large numbers). If everything is done well, how is it possible that your insurance claim is rejected? We hear many stories claiming that they are unable to claim from their insurance. These people are usually angry and when asked about the details of the claim, remain strangely silent on it. I feel that this has led to some distrust to insurance companies. These are some of the common comments I hear when it comes to claiming from insurance.

“I heard from my father’s friend that he couldn’t claim when he was hospitalised”

“My friend tried to claim from his plan. After buying, the consultant said he cannot claim from this plan”

Seeking to understand where they are coming from, I personally asked them about their situation. Finally, I realised that there are 3 secrets to not get your insurance claims rejected. (Secret #3 will blow your mind)  

3 Secrets to not get your insurance claims rejected

  I did a poll on instagram to see if there would be people out there will be interested in this topic (Screenshot below). They have this fear because of one reason and that is they have never claim before. They will not be sure if a particular situation is claimable or not. For experience financial consultants (Bespoke Financial Planner), we see claims regularly. On average, I do between 2 to 4 claims a week for my clients. Today, I want to share with you the 3 secrets to not get your insurance claims rejected.
How Not to get your insurance claim rejected
How Not to get your insurance claim rejected

Secret #1: Don’t listen to the plumper for investing advice

Each of us have different specialties. We hone our skills over time to be competent in that one thing. As a result, we get a salary from companies who pays us for providing services to their companies. This also explains why when there is a disruption in the economy, people who lose their jobs find it hard to find another job (think about the amount of taxi drivers who will lose their jobs if autonomous driving kicks in). The point I’m driving here is to get advice from those that are experts in it. Will you get advice on how to cook chicken rice from a vegetarian store owner? Will you get advice on which surgery to go for from a teacher? Then why will you get advice on insurance claims from a coffeeshop uncle or auntie? While a teacher may have some experience in surgery, a vegetarian store owner may had chicken before, the uncle may have some claims done before, they are not the experts in that particular craft. Seek advice about claims (especially if there is upcoming surgery) from a professional financial consultant (Feel free to contact us) who have done numerous claims to help you assess better.

Secret #2: Going for an annual financial review

How Not to get your insurance claim rejected financial review
How Not to get your insurance claim rejected: Financial review
After speaking to the father’s friend (as mentioned above), I realised that he has not met any financial consultant for the last 10 years (we will not be talked about why he refused to meet anyone in this article). Indeed, he was not able to claim a cent from hospitalization stay and that is because he didn’t had one. Yes. You read that correctly. He didn’t have one. Over the years, he had 10 accident plans bought over the phone from various banks. He was convinced he was insured adequately. Unfortunately, he wasn’t. Over the years, we may forget what plans we might have. The last time you saw your policy contract was probably the first time you bought the insurance. (Are you one of those who have not remove your policy from the envelope it was sent in? =p) Going for an annual financial review not only keep you reminded on your existing plans, it keeps you abreast on the latest changes that will affect you. (Read More: Life Insurers to change definition of Critical Illness)

Secret #3: Proper Disclosure

“Will XXX company find out if I have done regular breast check ups with a specialist?”

“I don’t want to get an exclusion. Can you help me answer “no” in the underwriting form?”

These questions sends shivers down my spine when a prospect look me into my eye and say it. Every year, numerous life and health insurance claims are rejected on various grounds with material non-disclosure of facts pertaining to an individual’s health being the key reason for claim rejection. One of the easiest way to get your claims rejected is to not state the truth in your underwriting.
How Not to get your insurance claim rejected disclosure
How Not to get your insurance claim rejected: Disclosure
Most people underestimate the insurer investigation capability during claims. The claim can be rejected if a “non-disclosure” or “misstatement” of fact is discovered. In simpler words, it means if you “did not state” a given fact or “provide inaccurate facts” that will affect the policy approval, the claims can be rejected. Financial Consultants is NOT HELPING YOU when he is helping you hide these facts. He/She just merely pushing the problem in the future when there is a claim.  

Conclusion: We all want a happy claim experience

We buy insurance to insure ourselves against unforeseen circumstances. In those time, we will need the money the most. We want the claims experience to be fast and smooth. Nevertheless, I will pray that your health is good and not use the insurance. In Wealthdojo, we strongly encourage you to talk to your Insurance Financial Planner once a year for a review so that your protection needs can be taken care of adequately. (Click here to contact us to help you with your Insurance Financial Planning). We believe in bespoke financial planning. Whether it is money maximization, insurance or investing, we believe that everyone is different and the planning should be suited for you. All opinions above are my own. Please view our disclaimer page to understand more. I hope to nurture genuine relationships with all of my readers. Please feel free to contact me on my Instagram (@chengkokoh) or Facebook Page! Now that you’ve read about learnt about how to benefit from What you can do about price hikes for public transport in Singapore. I challenge you to read this article (Careshield Life: Disability Insurance Singapore )to push your understanding further!

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Early stage critical illness insurance worries

Why do you need early stage critical illness insurance in Singapore?

by with No Comment InsuranceMoney Mindset

Why do you need early stage critical illness coverage in Singapore?

Generally, critical illness insurance typically pays a lump sum in an event of a diagnosis of the critical illness. This amount of money is typically used to replace a person’s income and sustain their lifestyle. This is because it will not be easy to work straightaway after suffering from a critical illness.

One of my client recently asked me this question.

“Do I need an early stage critical illness since I have a critical illness insurance already?”

To answer this, we first have to ask ourselves this question.

 

What is early stage critical illness?

An early stage critical illness (to put simply) is an illness that is discovered at the very beginning. I will be giving 2 examples that are common in Singapore.

Why do you need early stage critical illness insurance in Singapore.
Why do you need early stage critical illness insurance in Singapore.

While it is true that an early stage critical illness is “less serious” that a major stage critical illness, a person might also need to be away from work for a short period of time (probably a year). This will lead to the second question.

Why do I need an early stage critical illness coverage?

While we take time away from work to recover to be well again, our lifestyle still carry on. Our utilities bills, our mobile bills, our daily commute and our daily food consumption still continues. The sudden lost of income from resting may start to DIG HEAVILY into your savings (that is meant for retirement). Worrying about money usually creates more stress and it may kill you more than the illness itself.

Early stage critical illness insurance worries
Early stage critical illness insurance worries

How much early stage critical illness coverage should I need?

Everyone is different. For Wealthdojo readers, we recommend your early stage critical illness coverage to be at least 1 year of your annual income. This means that if you are earning $100,000 a year, a recommended coverage you should have is at least $100,000. Premiums for early stage critical illness is usually higher as compared to the other protection plans in the market. This coverage was made popular in 2010 (The New Paper. 31 August 2010. She has 3 policies but no coverage) after a lady was unable to claim from her critical illness coverage even though she was paying high premiums ($600/month). Those were the times early stage critical illness coverage was not widely available.

Nowadays, insurance companies covers for early stage critical illness.

Early stage critical illness insurance claims
Early stage critical illness insurance claims. Source: The New Paper. 31 August 2010

While critical illness definition has been standardized in Singapore (Read: Life Insurers to change definition of Critical Illness), there is no standardized definition for early critical illness.

In Wealthdojo, we strongly encourage you to talk to your Insurance Financial Planner once a year for a review so that your protection needs can be taken care of adequately. (Click here to contact us to help you with your Insurance Financial Planning).

We believe in bespoke financial planning. Whether it is money maximization, insurance or investing, we believe that everyone is different and the planning should be suited for you.

All opinions above are my own. Please view our disclaimer page to understand more.

I hope to nurture genuine relationships with all of my readers. Please feel free to contact me on my Instagram (@chengkokoh) or Facebook Page!

Now that you’ve read about learnt about how to benefit from What you can do about price hikes for public transport in Singapore. I challenge you to read this article (Careshield Life: Disability Insurance Singapore )to push your understanding further!

Learn more by following us

Don't be shy. Just say hi.
Enhanced CPF Housing Grant

How to Benefit from the Enhanced CPF Housing Grant

by with 3 Comments CPF AccumulationGeneral EconomyInsuranceProperty Investment

When the government announced the Enhanced CPF Housing Grant, it was a mixed reaction. Those in the sandwich generation cheered, some were disappointed. The question is, how do you benefit from the Enhanced CPF Housing Grant?

Enhanced CPF Housing Grant
Enhanced CPF Housing Grant

Let’s first start by asking ourselves, what is the Enhanced CPF Housing Grant all about? (Read more: Make The Most Of Your CPF)

HDB Eligibility

The Enhanced CPF Housing Grant that is going to streamline current Additional and Special CPF Housing Grants as an attempt to make public housing affordable and available for everyone.

Firstly, the income ceiling for buying the HDB has increase to $14,000. This means that HDB will be available for more people to buy. Currently, those that are “earning too much” is not eligible to buy a HDB. To put it really simply, if your average gross monthly household income is less than $14,000, you are eligible to buy a HDB.

Enhanced CPF Housing Grant Income Ceiling
Source: HDB Website

Enhanced CPF Housing Grant Eligibility

Now that you know you are eligible to buy a HDB, the question is how much grant are you entitled to for the new Enhanced CPF Housing Grant. The answer is, it depends. It will depend on the followings.

  • Average Monthly Household Income (The higher your Household Income, the lower the grant)
  • Lease Coverage (To get full grant amount, the flat must have enough lease life until you and your spouse is 95)
Enhanced CPF Housing Grant Table
Source: HDB Website

Typically, the average monthly household income in Singapore for First-Timer Families (Assuming a couple who graduated from an University and working now) will be around $5000, this brings the grant amount to $40,000.

There are many permutations as to how this new Enhanced CPF Housing Grant will affect people. There will definitely be people who will compare between the old scheme and the new one. For Wealthdojo, we believe that it is better to well understand your own situation rather than compare your grant to everyone else. You could always consult the HDB Board to better understand your situation.

How will this affect Property Prices?

In Wealthdojo, we are a platform for people to make informed financial decisions. We want to understand how this Enhanced CPF Housing Grant will impact our financial journey as a whole. The below are my personal opinions and strictly my own.

  • There will be an increase in property prices. A grant makes buying the property affordable for a selected group of people. It doesn’t mean the price has dropped. Loosely speaking, we are not taking into account location and various other consideration for buying a property. An isolated trend table for Punggol shows that over the years, there has been an increase in price for BTO flats.
    Enhanced CPF Housing Grant BTO Price Changes
    Enhanced CPF Housing Grant BTO Price Changes
  • Private Property Prices will increase. A simple chart like this show that there a simple positive correlation between private and HDB prices. Logically, if we compare a similar size HDB and a Private Property in the same area, the price of a private property will be higher.
    Correlation HDB Private Properties
    Correlation HDB Private Properties

Insurance for Properties

Buying a property might be the biggest purchase for most people, it is also important to plan for insurance for your properties. (Read more: Insurance for Investors). In a simple nutshell, these are the 3 insurance that you have to get for your property.

  • Fire Insurance

If you are living in a HDB, it is compulsory to get a fire insurance. As the name suggest, it covers for fire BUT the scope of the coverage is very small. HDB fire insurance compensates for damage to the building (ONLY). As a general rule of thumb: If it wasn’t already there when you got your house keys, then it’s not covered by HDB fire insurance. That’s why we need to have content insurance.

  • Home Content Insurance

In a fire, naturally the items in the house will get damaged. This will include items like Air-Con, the fridge, the television, the sofa, the bed, etc. Not only do you need to purchase these items again, you will need to renovate the house again to bring it back to living conditions. Most home content insurance covers for renovation and also home content.

  • Mortgage Interest Insurance

Most people will get a loan from a bank to finance their property. For banks, they will need an assurance that you will be able to pay for the loan. That’s why they assess the loan amount from your salary. The biggest risk a bank (and yourself) will take is if a person is unable to finance the loan. What happens in an event of a critical illness (Read More: Life Insurers to change definition of Critical Illness) such as heart attack and it robs away the ability for a person to earn money? Would this be extra burden on your partner? The bank has the right to claim back the property leaving your family on the streets. Would you want that to happen?

In summary, there will be new changes in the future too. Some things will change while others will remain the same.

In Wealthdojo, we believe in bespoke financial planning. Whether it is money maximization, insurance or investing, we believe that everyone is different and the planning should be suited for you.

All opinions above are my own. Please view our disclaimer page to understand more. 

I hope to nurture genuine relationships with all of my readers. Please feel free to contact me on my Instagram (@chengkokoh) or Facebook Page! 

Now that you’ve read about learnt about how to benefit from the Enhanced CPF Housing Grant , I challenge you to read this article (Careshield Life: Disability Insurance Singapore) to push your understanding further!

Learn more by following us

Careshield Life Disability Insurance Singapore

Careshield Life: Disability Insurance Singapore

by with 5 Comments Insurance

Careshield Life is a long term disability insurance in Singapore. Somehow, it is not receiving much publicity. It is a layer of protection that the government has set in place to help Singaporeans for long term disability needs. The 3 shields that Singaporeans have are the Medishield, Eldershield and Careshield. (Read More: Insurance for investors)

Careshield Life Disability Insurance Singapore
Careshield Life Disability Insurance Singapore

What is Careshield?

CareShield Life is a national long-term care insurance scheme designed to provide basic protection against long-term care costs, from 2020. CareShield Life will feature higher payouts that increase over time with no cap on payout duration, to provide better protection against the uncertainty of long-term care costs if you become severely disabled.

(Source: Careshield Life)

How does it benefit me?

Careshield Life has these 4 properties

  1. Lifetime Cash Payouts: As long as the person is severely disabled.
  2. Payouts will increase over time. It will start from $600 in 2020.
  3. Premiums are fully payable by Medisave.
  4. There will be government subsidies to help defray some of the cost.

Is this compulsory?

Coverage will begin when you are 30 years old. Thus, if you are born from 1980 to 1990 (aged 30 to 40 in 2020), you will be automatically covered by CareShield Life in 2020. If you are born after 1990 (aged below 30 in 2020), you will be automatically covered by CareShield Life when you turn 30.

If you are born in 1979 or earlier, you can choose to join CareShield Life in 2021, if you are not severely disabled. To make joining CareShield Life more convenient, you will be automatically covered by CareShield Life from 2021 if you are a Singapore Resident born between 1970 and 1979 and are insured under the ElderShield 400 scheme and are not severely disabled. If you are automatically covered and do not wish to participate in the scheme, you have up to 31 Dec 2023 to opt out from the scheme and get your premiums refunded.

In other words, it is compulsory for those born in 1980 and after.

Is this really necessary?

As Singapore population is slowly aging, 1 in 2 healthy Singaporeans aged 65 could become severely disabled in their lifetime, and may need long-term care. We never know whether an disability may happen, but what we can do is always to prepare for it.

In Wealthdojo, we believe in bespoke financial planning. Whether it is money maximization, insurance or investing, we believe that everyone is different and the planning should be suited for you.

There are many myths related to getting life insurance, I hope these will continue to be myths and let’s financial educated on making the right decisions. 

All opinions above are my own. Please view our disclaimer page to understand more.

I hope to nurture genuine relationships with all of my readers. Please feel free to contact me on my Instagram (@chengkokoh) or Facebook Page!

Now that you’ve read about learnt about Careshield Life: Disability Insurance Singapore, I challenge you to read this article (Life Insurers to change definition of Critical Illness) to push your understanding further!

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